The pan-European Stoxx 600 finished down 0.13 percent, paring some of the losses it saw in late afternoon trade.

London's FTSE 100 and Germany's Xetra DAX managed to eke out a gain, closing up 0.13 and 0.16 percent, while France's CAC 40 was little changed.

When it comes to sectors, financials were one of the worst performing on Monday, with telecoms and retail also posting solid losses.

This comes after the LSE said that it would not be able to fulfill all the antitrust demands made by European regulators on its planned merger with Deutsche Boerse. As a result, shares of the LSE and Deutsche Boerse dropped sharply during trade, both ending in the red.

The Italian insurer Generali fell 2.85 percent after Intesa Sanpaolo said it would no longer pursue a merger with the group. The Italian bank, on the other hand, was among the best performers finishing the day up 5.5 percent.

The pound was in focus on Monday after a report in The Times of London said Prime Minister Theresa May is preparing for Scotland to call a referendum to break away from the U.K. at the same time the country begins Brexit negotiations with the EU. At Europe's close, sterling pared most of Monday's losses, trading at $1.2465 against the U.S. dollar.

Earnings season in full swing

In corporate news, Persimmon posted better-than-expected profits, while Associated British Foods, kept its full-year earnings guidance after all divisions reported growth. Despite stronger performance seen in early trade, the housebuilder closed just above the flatline, with AB Foods finished 0.9 percent down.

For PostNL however, shares sank over 7 percent, after posting an underlying cash operating income of 245 million euros ($258 million) in 2016, below analyst expectations, and cut its underlying cash Earnings Before Interest and Taxes guidance slightly for 2017; Reuters reported.

Meanwhile, British insurers Direct Line and Admiral Group fell over 7 and 2 percent respectively, after the U.K.'s Ministry of Justice cut the discount rate for personal injury claims on Monday, from 2.5 percent to minus 0.75 percent.

Elsewhere, a slight tick-up in oil prices helped alleviate the negative sentiment seen in markets, with Brent and U.S. crude trading at $56.15 and $54.16 at the market close, respectively.

Overseas, U.S. markets fluctuated around the flatline at Europe's market close, as Wall Street remained on the look out for more news out of the U.S. administration.